TMFMmbop (30.99)

Michael Pettis Predicts China Stock Market Rally

5

The math is pretty simple. Let the banks keep lending, but shut off the ability to speculate in real estate. That money has got to go somewhere.

After a few weeks of official posturing, with the concomitant fear and market contraction, the markets will stabilize for a while, and then take off again. If Beijing is really successful in halting real estate speculation in the primary cities, expect the secondary cities to take off. Also after a period of stability we will probably see great action in the stock market as liquidity pours back in. Last Friday the SSE Composite closed at 2688. I bet it is much higher by the end of the summer.

I tend to agree. I think the China fear is overblown. Sure, their economy has it's problems and risk of overheating, but they are still the healthiest economy on the planet right now, and that includes the U.S. If China stocks have a resurgence, commodities will follow them up. They are joined at the hip.

I opened a couple of positions in my short-term portfolio this week. I'm now 50/50 stocks and cash. The stocks are selective Chinese small caps. I now have positions in NEWN, LLEN, YUII and CDCS

If you're bullish on China right now and want to be aggressive you should also be considering adding commodities to your bullish list AA, MTL, STLD, K....etc.